Investors are starting the new year staring at an already declining market. Predictions of more losses in 2023 are in many headlines. The downturn hit most industries. Biotechnology was no exception. the SPDR S&P Biotech ETF Down 20% from last year. This is slightly worse than the total return of Standard & Poor’s 500 index.
But at least two stocks buck this trend. fact, Biomarin medicines (BMRN 4.01%) And Novo Nordisk (NVO -2.60%) It is at its highest level in a year. Here’s how these two vital technologies take very different approaches to presenting to shareholders.
1. Biomarin Medicines
BioMarin is relatively unique in the biotechnology industry. The company was founded in 1997 to develop treatments for extremely rare genetic diseases. The conditions he treats — such as disorders related to bone development and enzymes — mostly affect children. Because diseases are so rare, treatments are very expensive. Many run into hundreds of thousands of dollars annually. It is the only way the company can cover the development cost.
It raises the bar with Roctavian, a one-time infusion for severe hemophilia. Reports indicate that the company is pricing it between $2 million and $3 million. A watchdog group that monitors drug prices found that it could still be a bargain for insurance companies that were paying about $25 million over their lifetime of treatments. It has been approved for conditional use in the European Union — where it commands about $1.5 million — and the US Food and Drug Administration (FDA) may act on the company’s application by the end of the first quarter.
The decision may be delayed by a few months while the agency completes its review. However, Wall Street is clearly betting on approval. The stock is at its highest level since mid-2020. That’s when the US Food and Drug Administration (FDA) issued a stunning denial of Roctavian’s accelerated approval. With three years of data, any lingering questions should finally be answered.
2. Novo Nordisk
On the other end of the spectrum is a company that makes medicines to combat some of the most common chronic diseases faced by the developed world. Novo Nordisk is one of three companies – along with Eli Lilly And Sanofi – which accounts for nearly 90% of global insulin production. As diabetes becomes more prevalent, so does shareholder returns. Just $100 invested in stocks 30 years ago is worth over $15,500 today. This has not been done yet.
The company’s weight-loss drug Wegovy was approved in 2021 and demand for it has so far outpaced supply. This is due to a combination of many patients wanting the drug and some manufacturing issues. Ozempic, another of the company’s diabetes treatments that produces a similar effect for weight loss, was used in the meantime.
Overall, the company’s bariatric care division’s sales (in euros) grew 75% for the first nine months of 2022. Wall Street expects that to continue. Analysts from Morgan Stanley The potential market for obesity drugs has been estimated at $50 billion by 2030 – that’s more than 20 times larger than it is today. Even though there’s plenty of competition, this kind of opportunity likely means Novo Nordisk stock will continue to climb in the coming years.
With obesity rates more than doubling since the 1980s, and the pandemic only accelerating this trend, Novo Nordisk stock may offer one of the few reliable investments regardless of economic background.
Jason Hawthorne has no position in any of the stocks mentioned. The Motley Fool has positions in Spdr Series Trust – Spdr S&p Biotech ETF and recommends. The Motley Fool recommends BioMarin Pharmaceutical and Novo Nordisk A/s. The Motley Fool has a disclosure policy.